Vertel tries to make the world M*Ware aware

Service management mediation provider Vertel raised a timely and critical $1.5 million yesterday that will fund the company through the end of the year as it tries to build on second quarter commitments by NEC and Nokia.

Vertel’s revenues for the second quarter 2002 slipped 42% to $2.1 million, compared to $3.5 million in the same quarter last year, but sequentially revenues increased by 3%. The bright side came from the company’s progress in cost containment, which drove gross profit margins to 55%, a 9% increase over last quarter.

“We continue to make steady operational and financial progress despite a very challenging environment,” said Marc Maassen, president and CEO of Vertel. “We were able to keep sales stable and our operational metrics continue to improve.”

The $1.5 million transaction, which closed on August 13, resulted from the sale of a promissory note to SDS Merchant Fund. It was the second such transaction in two quarters. Vertel received net proceeds of approximately $3.4 million earlier in the year in another note sale, which was used during the six-month period ending June 30th.

Nasdaq is currently reviewing Vertel’s compliance with Nasdaq SmallCap Market listing requirements and is considering an extension for the company to re-comply.

In the meantime, Vertel has taken steps to secure the company’s future. Over the past nine months, Vertel’s headcount was reduced from 140 to approximately 63. This was accomplished without jeopardizing the company's growth initiatives, Maassen said.

Vertel’s growth initiatives are focused on its M*Ware solutions. M*Ware combines the company’s mediation and network management applications into a single platform for gathering network data for various OSS applications, including provisioning, customer service, policy management and service level management.

M*Ware technology is sold to both service providers and equipment manufacturers. Vertel’s flagship products, e*ORB, a small object request broker, and WebResolve, were combined into the M*Ware platform earlier this year.

“We believe revenues should continue to increase this year as our M*Ware product offerings and professional services competencies continue to gain acceptance,” Maassen said.

The commitments by NEC and Nokia could help. Maassen said that NEC’s commitment showed confidence in the company’s traditional circuit solutions area, He added that, “Nokia gave us another opportunity delivering 3G wireless compliant mediation solutions.”